India has the 4th largest FMCG sector which is mostly an organized sector with presence of big MNC and Indian companies like Britannia India, Nestle, Hindustan Unilever, to name a few. More than 50% of the sector is food and beverages with personal care and household items accounting for another 30%. The key players in FMCG are characterized by strong distribution network, large brand with good recall value, well-advertised through multiple mediums and good penetration in urban and rural markets. Entry into such markets, competing against well established companies posts a huge challenge for anyone entering into FMCG sector.
Pathanjali is the fastest growing company in the FMCG sector. Headquartered in Haridwar, Pathanjali is valued at Rs. 30 Billion. Pathanjali started off as an Ayurvedic company with interests in food and personal care. Today it has diversified into 45 types of cosmetics and 30 types of food products and is foraying into world of textiles through its range of western as well as traditional Indian wear. It has been unprecedented example of a new company taking on multiple Indian and MNC players in multiple markets.
This paper will focus on brand building done by Baba Ramdev, riding on his popularity for conducting free yoga camps. The paper will focus on ground level brand building effort by Pathanjali by positioning the company as a charitable organization and disrupting the market through introduction of low cost products. These products are branded as traditional products used since ancient times and which were part and parcel of the Indian culture. It has positioned itself in minds of the consumers as an Indian Company, made in India products, keeping in mind the needs of the traditional Indian needs, values and beliefs. All the profits go to charitable which gives the impression that Pathanjali is not a business house but a charitable organization with a social cause.
The USP of Pathanjali products has been its pricing strategy offering products similar to ones available in the market at a much lower cost. This has been in stark contrast to many products being labelled organic and sold at higher prices, targeting the rich thereby alienating the common man. The other factors contributing to product success is low cost, use of natural ingredients which is chemical free, easy availability and portrayed to be beneficial to health.
The paper will discuss products and product mix and how new products like noodles and biscuits are offered in competition to well established brands like Maggie and Parle. They are also offering innovative products like aloe vera juice which are positioned both as Food as well as medicinal items, simultaneously taking on companies like Dabur and traditional Ayurvedic medicine companies like Kottakal.
The strategy has been to introduce products in established as well as emerging markets in order to capture market share and also capture niche markets. It has also forayed into household items like cleaners which require monthly consumption and translates to continuous business. Pathanjali also has come up with its own 4000+ strong retail network and tie yup with companies like Future Group to make its products available in the market. This all round strategy has helped Pathanjali grow at a phenomenal rate giving it the title of fastest growing company in recent times.
The paper will have a section of challenges faced by Pathanjali in the current market. Apart from traditional challenges of maintaining market share, getting efficient delivery networks and advertising, there are also unique set of challenges for Pathanjali. Since Pathanjali has diversified into many markets they do not have one single competitor. Each product faces a competition from individual or bunch of competitors. There are traditional rivals in Ayurvedic food industry like Dabur and rivals at product level like Colgate in toothpaste segment. Getting into new markets like textiles, introduces additional competition from established brands in textiles like Levis and Spykar. R4
The paper will conclude with suggestions on facing challenges, sustaining inorganic growth and improving market share as well as brand recall in minds of customers, to sustain growth and continue gaining market share in respective areas. It has to fight off threats of new entrants as entry level barriers in some segments are not high.